At the Detroit Institute of Arts in Detroit, The Thinker, a sculpture by Auguste Rodin is seen outside the art museum. / Associated Press/Carlos Osorio

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Detroit Free Press Staff Writer

In 1919, with the Detroit Institute of Arts in dire financial straits and Detroit’s economy booming, museum leaders ceded ownership of the art and building to city hall in exchange for annual funding.

Nearly a century later, history is preparing to do a somersault.

Detroit is now bankrupt, the DIA is more financially stable than it has been in decades and the museum stands on the brink of being spun off into an independent charitable trust that would once again own the collection and building. The shift, which has profound implications for the future of the DIA and the restructuring of the city, would come as part of a mediated $815-million deal that would shore up municipal pensions and protect art from sale in the city’s bankruptcy.

Formally severing Detroit’s ownership of the DIA would be at once revolutionary and conservative. It would represent a landmark in the the history of the museum, forever liberating it from the vagaries of city finances and politics at the root of many of the DIA’s struggles through the decades. Moreover, no city has ever ceded ownership of an art collection of such stature or financial value — estimates range in the billions.

Transferring the DIA away from government control could also raise potentially thorny issues for city political leaders whose predominantly African-American constituents have long feared that Detroit’s financial troubles would become pretext for stripping them of their most prized assets.

On the other hand, an independent DIA would simply restore an autonomy standard among the overwhelming majority of American museums. Under the current plan, the DIA would be forbidden from ever moving its collection from the city. DIA leaders have long-pined for independence, but severing ties was always a political nonstarter: In Detroit normalcy qualifies as a radical shift.

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“An independent DIA is enormously significant,” said Jeffrey Abt, a Wayne State University art historian whose book “A Museum on the Verge” chronicles the DIA’s turbulent history. “It will make the operation of the museum strong and its longevity much more secure. It solves a host of problems, some of them created by the bankruptcy, and it would probably make it a much more popular institution for donors.”

By tying its fate to the city 95 years ago, the DIA became vulnerable to the boom-and-bust cycles of Detroit’s economy and the whims of its politicians. The DIA soared during good economic times but struggled mightily during bad ones, nearly closing on several occasions. When the city ran out of money in the 1970s, the state stepped in as the DIA’s primary funder, but state support began to disappear in the 1990s, and today, the museum doesn’t receive any city money and or annual funding from the state beyond occasional grants.

It’s only because the DIA’s collection is owned by the city that the museum finds itself trapped in the bankruptcy saga. The greatest irony of all is that bankruptcy might now also provide the escape hatch to independence and the kind of ironclad protection for the collection that is impossible to guarantee otherwise.

Though unprecedented, Detroit spinning off the DIA would not affect the city’s bottom line or ability to earn revenue. The monetary value of the art was never part of the city’s pre-bankrutpcy ledger, and the museum’s 1997 operating agreement with the city prohibited the sale of art for any reason other than enhancing the collection as industry ethics permit.

Still, some say a divestiture, coming on top of the recent lease of Belle Isle to the state and of Cobo Hall to a regional authority, could engender more feelings of loss within the city’s collective psyche. Yet, contrary to the usual course of Detroit politics, there has been little opposition expressed by Detroit residents or politicians — at least so far.

Certainly, the idea has not generated anywhere near the heated controversy surrounding Belle Isle. Nor has it sparked the racially charged protests heard from union officials in the late 1990s, when the current operating agreement was negotiated and daily operations of the DIA were transferred from city hall to the museum board and staff (while leaving ownership with the city). Back then, union officials charged that the city was giving its crown jewels away to white suburbanites.

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John Mogk, a law professor at Wayne State University who specializes in government and urban development issues, explained that times, conditions and attitudes have changed. “Twenty years ago, no one fathomed that Detroit would be in the depth of the financial crisis it is today,” he said. “Residents in neighborhoods have seen the level of services significantly diminish. That has tempered the large majority of objections to things like the DIA or the use of assets to stabilize the city and improve services.

“There might be a negative psychological effect for some to see assets declining and a sense that the city no longer has the economic strength it once had. But the real economic assets are not the facilities that it owns but the economic base that resides in it that’s employing people, providing taxes and generating economic health.”

Paint hasn't dried

Detroit emergency manager Kevyn Orr’s restructuring plan for the city endorsed the $815-million rescue fund aimed at softening pension cuts and safeguarding the art, but it is by no means a done deal. Spearheaded by U.S. District Judge Gerald Rosen, the mediator in the bankruptcy, the so-called grand bargain includes $365 million from national and local charitable foundations, a $100-million fund-raising commitment from the DIA and $350 million in state matching funds that must be approved by the Legislature.

All of the money would funnel into pensions over the next 20 years. In exchange, the museum would be granted its independence and creditors would be prohibited from forcing the sale of art to recover the billions that the city owes them. But so far, city pension representatives are balking at the required financial concessions, management oversight and promises not to sue. Legislative approval for the matching funds also remains an uphill battle.

On yet another front, other major creditors have made it clear in court filings that they intend to continue fighting for the right to sell DIA masterpieces. Until a final deal is reached and passes muster with U.S. bankruptcy Judge Steven Rhodes, the DIA remains in limbo, ready to go to court if necessary to protect its collection. The DIA maintains that because its collection is held in the public trust, the art can’t be sold to raise cash for the city. But experts say it’s unclear whether that argument would hold up in bankruptcy court.

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Meanwhile, other DIA-related terms of the grand bargain, including governance and oversight specifics, are being hammered out in negotiations among lawyers for the museum, the city and the foundations. DIA Chief Operating Officer Annmarie Erickson said the museum has been charged with establishing a committee to ensure that its governance model mirrors best practices for a major nonprofit museum. That may or may not mean any changes or additions to its board.

“In conversations with the foundations, this has been characterized as the DIA’s opportunity to ensure that it has the governance model it wants going forward,” Erickson said.

Some state legislators have indicated that their vote for the grand bargain would at least partially be contingent on the DIA expanding its presence throughout the state. Erickson said that, as part of the deal, the museum has committed to statewide programs, including traveling exhibitions, education initiatives, conservation assistance for state museums and professional development for museums and emerging professionals.

'Best of both worlds'

Detroit residents and politicians point to a variety of reasons for the muted reaction to the prospect of Detroit surrendering ownership of the DIA:

■ The museum has already been operating on a daily basis as an independent nonprofit.

■ The DIA and its collection aren’t leaving the city.

■ The distasteful alternative of possibly losing masterpieces to the highest bidder.

■ The financial relief for pensioners baked into the rescue plan that speaks to residents and lawmakers’ primary concern.

■ The greater use and personal affection for Belle Isle among many Detroiters compared to the DIA and the absence of the specter of perceived state takeover of the museum.

Interviews with a half-dozen Detroiters on a recent afternoon in Eastern Market found no objections to the city losing control. David Bonner called ownership a “nonissue” for most people. “It’s just not as important at this point as long as the quality of service stays the same and the experience stays the same,” he said.

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Bonner said that Belle Isle became a political football because there were fears that average Detroiters might lose access to a cherished park and because it simply resonates more with many — though not all — city residents: “They talk about Belle Isle vociferously at my gym, but I never hear people talk about the DIA.”

Grace Hooker, who works behind the counter at Germack Pistachio, described the situation as something of a “no-win,” because the choice was between the city relinquishing ownership or risking the sale of irreplaceable masterpieces. “Rather than lose it, I’d rather it have a new owner,” she said. “You want to make the right choice for the museum, for the city and for history’s sake.”

Detroit City Councilwoman Saunteel Jenkins said she had no objections conceptually to spinning off the museum, but she wouldn’t formally endorse the deal without seeing the details. “The DIA has been managed by a private nonprofit for many years, so Detroiters are used to that. And whether it’s a city-owned asset or run by a nonprofit, it will continue to be a Detroit asset on Woodward. That’s what’s important. If we can make that happen and protect retirees, then we get the best of both worlds.”

State Sen. Bert Johnson, a Highland Park Democrat, said he was “leaning strongly” toward supporting the proposed contribution to the rescue fund because his top priority was taking care of pensioners and money would create a softer landing for citizens. He said he felt some loss when it came to the city giving up the DIA, while adding that “nobody wants a fire sale. We do have to pay attention to trends, and the emergence of private-public partnerships, and the DIA is part of that. The ultimate objective is that the DIA remain intact as we know it.”

Another way to look at the divestiture is that the DIA is effectively buying back its entire multibillion-dollar collection of 65,000 works — including stunners by Van Gogh, Brueghel, Matisse, Rembrandt, Picasso and more — for the bargain-basement price of $100 million. Still, the DIA’s Erickson noted that raising an extra $5 million a year for the next 20 years, on top of already ambitious goals, would be a significant challenge.

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The DIA must already raise $10 million-$12 million a year for operations and has committed to raising about $200 million in critical endowment funds over the next decade to replace revenue from the tri-county property tax approved by voters in 2012. The tax, which expires in 2022, funnels about $23 million a year to the museum, accounting for some 70% of its $32-million operating budget.

There are also other costs to independence. For example, voters approved $25 million in bonds for capital improvements for the museum building some years ago, but those bonds were never floated. DIA leaders assume the city would not issue those bonds once the museum was granted independence. On another front, expanding statewide exhibition and education programs could add another $1 million to the DIA’s annual budget.

Still, Erickson said that the assurance the collection would never be placed in jeopardy again by the city’s financial trouble was “a silver lining” to the epic battle over the museum’s fate during the last nine months. “Since the bankruptcy, a lot of donors have been taken aback, so they’ll be happy that their donations will be protected,” she said. “This will definitely help with fund-raising, maybe even more so with gifts of art.”